Character Rigging and Mesh Deformations rotating and shrinking strangely around joint
Select your Mesh and delete all vertex groups and all modifiers as shown:


Select your Mesh then select your armature using Shift+RightClick and hit Ctrl+P then choose With Empty Groups:

Switch to Pose Mode then select the two bones LWrist and LShoulder then select the mesh using Shift+RightClick as shown below:


Switch to weight painting mode and select Assign Automatic From Bones from the Weights menu as shown below:



Done, now the mesh will have weights assigned to these bones with good deformations as shown below: